Banks (Shareholdings) Regulations (Amendment)

Legislation au C2004L00959 Regulations Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

STATUTORY RULES 1985 NO. 233

ISSUED BY THE AUTHORITY OF THE TREASURER

BANKS (SHAREHOLDINGS) ACT 1972

BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT)

Section 10 of the Banks (Shareholdings) Act 1972 (the Act) generally limits the nominal amount of the voting shares of a bank incorporated in Australia in which a person (including a corporation) may have an interest to 10 per cent, or 15 per cent with the approval of the Treasurer, of the total nominal amount of the voting shares of the bank. Under sub-section 10(4) of the Act the Governor-General may, after application made to the Treasurer by a person, fix a higher percentage for that person by instrument published in the Gazette. Sub-section 10(3) provides that where a percentage is applicable in relation to a person, that person may not have a greater nominal amount of shares than the percentage so fixed.

The Treasurer recommended that a banking authority be granted to CHASE AMP Bank Limited and the Administrator of the Government of the Commonwealth of Australia has now granted an authority to CHASE AMP Bank Limited.


CHASE AMP Bank Limited is owned 50 per cent by the Australian Mutual Provident Society and 50 per cent by Chase Manhattan Holdings (Australia) Limited, a company incorporated in the USA. Accordingly, Australian Mutual Provident Society and Chase Manhattan Holdings (Australia) Limited each applied to the Treasurer for a percentage of 50 per cent to be fixed under sub-section 10(4) of the Act in respect of their shareholdings in the new bank. The Treasurer considered that it was in the national interest that an exemption for these interests be granted.

Paragraph (8) (4) (c) of the Act states ‘where a body corporate has an interest in a share and a person is, the associates of a person are, or a person and his associates are, entitled to exercise or control the exercise of not less than three-twentieths of the votes attached to the voting shares in the body corporate, that person shall be deemed to have an interest in that share’. Each corporation which has by virtue of this paragraph a deemed interest in more than 15 per cent of the voting shares of a bank is required to have a percentage higher than 15 per cent fixed under sub-section 10(4).


By virtue of this paragraph the following corporations are deemed to have the same interest in the bank as Chase Manhattan Holdings (Australia) Limited and each applied for a percentage of 50 per cent to be fixed under sub-section 10(4) of the Act.

(a) Chase Manhattan Overseas Banking Corporation which holds all the issued capital of Chase Manhattan Holdings (Australia) Limited;

(b) The Chase Manhattan Bank NA which holds all the issued capital of Chase Manhattan Overseas Banking Corporation; and

(c) The Chase Manhattan Corporation which holds all the issued capital of The Chase Manhattan Bank NA.

Because the Australian Mutual Provident Society is a mutual society and has no shareholders, no other corporation is deemed to have a 50 per cent interest in CHASE AMP Bank Limited by virtue of paragraph 8(4) (c).

Having regard to the fact that these interests are held indirectly through Chase Manhattan Holdings (Australia) Limited, there was no objection to the exemption being granted to all the applicant companies. Therefore, an


instrument, has been gazetted which separately but not cumulatively fixes a percentage of 50 per cent under sub-section 10(4) for each of the following corporations in relation to their interests in CHASE AMP Bank Limited:

• Australian Mutual Provident Society

• Chase Manhattan Holdings (Australia) Limited

• Chase Manhattan Overseas Banking Corporation

• The Chase Manhattan Bank NA

• The Chase Manhattan Corporation

Under section 9 of the Act the associates (ie all officers, partners, subsidiaries etc) of the above corporations are also deemed to have the same interest in CHASE AMP Bank Limited as the above mentioned companies. The companies made application to the Treasurer for a ‘class’ instrument fixing a percentage of 50 per cent in respect of their officers, pursuant to sub-section 10(5A) of the Act. Hence, an instrument has been gazetted, which declares that for the purposes of the Act the percentage of 50 per cent is also applicable to the persons who are from time to time relevant officers of each of the above corporations in respect to CHASE AMP Bank Limited.


Under the Act, however, it is not possible to make such a ‘class’ instrument for the interests of the associates of those corporations other than for the relevant officers. These ‘other associates’, as defined in section 9, represent an extremely large and ever changing list of persons/corporations and rather than make an instrument, pursuant to sub-section 10(4), for every person within the meaning of section 9 it is convenient to prescribe these interests as provided for by section 17 and paragraph 8(9)(d).

Paragraph 8(9)(d) of the Act provides that a prescribed interest in a share that is an interest of such person, or of the persons included in such class of persons, as is prescribed shall be disregarded. The Banks (Shareholding) Regulations (the Regulations) prescribed a class of persons in relation to their interests in Australian Bank Limited deemed to be held by sub-section 9(2) of the Act and thus their interests are disregarded for the purposes of the Act. The effect of the amendments to the Regulations is to do the same in the case of CHASE AMP Bank Limited.

The Regulations have been amended to incorporate references to both Australian Bank Limited and CHASE AMP Bank Limited in a schedule to the Regulations. For each of the sixteen successful applicants announced by the Treasurer on 27 February 1985 which proceeds to the obtaining of a banking authority, a similar addition will be made to the Schedule to the Regulations.


Details of the regulations are as follows:

• Regulation one provides the definition of the Principal Regulations;

• Regulation two amends regulation three of the Principal Regulations which prescribes the interest in a share that a person is deemed to have by virtue of sub-section 9(2) of the Act in respect of a bank that is now specified in the Schedule;

• Regulation three repeals regulation four of the Principal Regulations which prescribed the class of persons in relation to an interest in a share in Australian Bank Limited, namely persons who are deemed to be associates of specified corporations. The new regulation maintains the current prescribed class of persons in relation to an interest in a share of Australian Bank Limited by reference to corporations specified in the Schedule and, in relation to an interest in a share of CHASE AMP Bank Limited, prescribes the class of persons who are deemed to be associates of any of the following corporations specified in the Schedule:

• Australian Mutual Provident Society

• Chase Manhattan Holdings (Australia) Limited

• Chase Manhattan Overseas Banking Corporation

• The Chase Manhattan Bank NA

• The Chase Manhattan Corporation

Overview

The Banks (Shareholdings) Regulations (Amendment) Statutory Rules 1985 No. 233, issued by the authority of the Treasurer under the Banks (Shareholdings) Act 1972, were enacted to address the specific shareholding interests of various corporations in CHASE AMP Bank Limited. The Act generally limits the voting shares a person may hold in an Australian bank to 10 per cent, or 15 per cent with the Treasurer's approval. The 1985 amendment allowed for an exemption for CHASE AMP Bank Limited, which is jointly owned by the Australian Mutual Provident Society and Chase Manhattan Holdings (Australia) Limited. The policy objective was to ensure that an exemption for these interests aligned with the national interest, thereby facilitating the granting of a banking authority to CHASE AMP Bank Limited. The regulations also amended the prescribed class of persons to disregard certain interests for the purpose of the Act, effectively streamlining the application process for large and varied associate interests.

Scope and Application

The Banks (Shareholdings) Act 1972 applies to any person, including a corporation, who has an interest in the voting shares of a bank incorporated in Australia. The Act sets a limit on the nominal amount of voting shares that can be held by any individual or entity, with a general limit of 10% of the total nominal amount of voting shares of the bank, or 15% with the approval of the Treasurer. The Act also provides for the Governor-General to fix a higher percentage for a person by instrument published in the Gazette. The Act's application is extended through subordinate instruments, such as the Banks (Shareholdings) Regulations, which can prescribe interests in shares that are to be disregarded. The Regulations have been amended to incorporate references to both Australian Bank Limited and CHASE AMP Bank Limited, and the amendments will apply to any successful applicant for a banking authority.

Key Provisions

The Banks (Shareholdings) Regulations (Amendment) Statutory Rules 1985 No. 233 addresses the shareholding limitations of certain corporations in Australian banks. Section 10 of the Banks (Shareholdings) Act 1972 (the Act) generally limits the nominal amount of voting shares that a person or corporation can hold in an Australian bank to 10 per cent, or 15 per cent with the approval of the Treasurer. The Governor-General can, on application by a person, fix a higher percentage through an instrument published in the Gazette, as outlined in sub-section 10(4). This provision allows for specific circumstances where higher shareholdings are deemed in the national interest. In the case of CHASE AMP Bank Limited, the Treasurer granted an exemption to the Australian Mutual Provident Society and Chase Manhattan Holdings (Australia) Limited, allowing them to hold a 50 per cent interest in the bank. This decision was based on the national interest and followed applications made by these entities. Additionally, several other corporations, due to their indirect interests through Chase Manhattan Holdings (Australia) Limited, also received similar exemptions. These corporations include Chase Manhattan Overseas Banking Corporation, The Chase Manhattan Bank NA, and The Chase Manhattan Corporation. The Act also deems associates of these corporations, including relevant officers, to have the same interest in CHASE AMP Bank Limited as the corporations themselves. The Banks (Shareholding) Regulations (the Regulations) have been amended to reflect these changes, ensuring that certain interests are disregarded under the Act. Regulation two amends the Principal Regulations to specify the interest in a share that a person is deemed to have by virtue of sub-section 9(2) of the Act in relation to the newly specified bank. Regulation three repeals the old regulation that prescribed the class of persons in relation to an interest in a share in Australian Bank Limited and introduces a new regulation that maintains the prescribed class for Australian Bank Limited while also prescribing the class of persons for CHASE AMP Bank Limited. The amendments to the Regulations also include a schedule that references both Australian Bank Limited and CHASE AMP Bank Limited. This schedule will be updated with references to other banks as they receive a banking authority, ensuring that the prescribed interests are accurately reflected in the Regulations. The Regulations aim to provide clarity and specificity regarding the interests that are disregarded under the Act, thereby maintaining the intended shareholding limitations while accommodating specific national interests. Breaches of the provisions in the Act or the Regulations may result in civil or criminal consequences, depending on the severity and intent behind the violation. While the specific penalties are not detailed in the provided text, it is known that breaches of financial regulations in Australia can lead to substantial fines, imprisonment, or both. The penalties can vary significantly based on the nature of the offence and the level of intent involved. It is essential for entities and individuals to comply with the Act and the Regulations to avoid any legal repercussions.

Legal classification tags

Area of Law
Banking Law
Corporate Law & Governance
Instrument
Regulation
Concepts
Definitions & Interpretation
Regulatory Standards
Licensing & Registration
Reporting & Disclosure Obligations

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.